Birdie and her husband Allan live in Gaithersburg, Maryland where they both own their own businesses and work from home. Birdie is a dog trainer and, at present, their condo is not cutting it in terms of space and outdoor access. Birdie specializes in a board-and-train model, which means she and Allan have a delightful (though often noisy) assortment of hounds living with them at all times. She loves and prefers this mode of training, but the limited space in their condo–not to mention their attached neighbors–are making her business approach challenging. Allan’s company, which is a family business with his parents, took a hard hit during the pandemic and he and Birdie are concerned about its future viability. Let’s dive in to help this couple as they map out a plan for more space for dogs and potentially a new career for Allan.
What’s a Reader Case Study?
Case Studies address financial and life dilemmas that readers of Frugalwoods send in requesting advice. Then, we (that’d be me and YOU, dear reader) read through their situation and provide advice, encouragement, insight and feedback in the comment section.
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Reader Case Studies are intended to highlight a diverse range of financial situations, ages, ethnicities, geography, goals, careers, incomes, family compositions and more!
The Case Study series began in 2016 and, to date, there’ve been 63 Case Studies. I’ve featured folks with annual incomes ranging from $17k to $200k+ and net worths ranging from -$300k to $2.9M+.
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I probably don’t need to say the following because you folks are the kindest, most polite commenters on the internet, but please note that Frugalwoods is a judgement-free zone where we endeavor to help one another, not condemn.
There’s no room for rudeness here–the goal is to create a supportive environment where we all acknowledge that we’re human, we’re flawed, but we choose to be here together, workshopping our money and our lives with positive, proactive suggestions and ideas.
A disclaimer that I am not a trained financial professional and I encourage people not to make serious financial decisions based solely on what one person on the internet advises. I encourage everyone to do their own research to determine the best course of action for their finances. I am not a financial advisor and I am not your financial advisor.
With that I’ll let Birdie, today’s Case Study subject, take it from here!
Hi there! I’m Birdie and I’ve been following Frugalwoods ever since I found out about the blog at FinCon 2015. My husband Allan and I live in Gaithersburg, MD, where we both own our own businesses and work from home. I have a dog training business and Allan has a business with his parents that publishes research and puts on conferences for a very niche industry. His parents are just transitioning into retirement and transferring the business to him this year.
Birdie’s Career Path
I’ve had 3 very different careers in the decade since I graduated college with an English degree: editing, marketing for a wealth management firm, and now dog training. Being a detail-oriented person, I really enjoyed editing and copyediting, but when I graduated, publications were folding left and right, so I took the first paying editing job I could find. It was at an investment newsletter company, where I got a crash course in stocks, bonds, mutual funds, ETFs and even unusual options strategies as I edited the newsletters. I’d never learned anything about personal finance or investing in school or from my family, so I feel very lucky to have had that job.
Though my income was small, I started saving and investing right out of college… but as I learned more about investing, the more I realized the company I worked for was basically a scam. In addition to editing, I had to respond to the customer service emails of subscribers who were promised astronomical returns by deceptive marketing. Many subscribers followed very risky strategies that were totally inappropriate for them. I particularly remember one email where a grandfather told me how following the advice in one of the newsletters caused him to nearly deplete his granddaughter’s 529 account. I knew there had to be a better way to deliver ETHICAL financial advice.
With the support of my fiance (now husband), I quit that job, got my Health and Life Insurance license and started studying for my Series 7. I thought working for a wealth advisory firm would be the best way to combine my interest in investing with my written skills. But the idea of selling to my friends and family just felt really icky and I realized it wasn’t right for me. Through trial and error in many interviews, I found out that the kind of firm I wanted to work for was not one where an insurance and Series 7 license would be of any use. I wanted to work for a fee-only, independent, fiduciary wealth management firm–and it took me nearly a year of being semi-employed to find the right firm. During that time I mucked stalls at a barn, wrote freelance articles for equestrian websites, and did a lot of fox hunting and trail riding–but that is a whole other story!
Once I finally found a fee-only, fiduciary, independent (and majority female) firm where I was proud to work, I was happy working there for a few years. But I found my role shifting more and more towards writing content, which just wasn’t what I wanted to do.
However, when I got a Golden Retriever puppy as a trail riding companion in 2017, I found that dog training scratched the same itch that horseback riding had for my entire life–and it was much more affordable! Before long my dog training hobby turned into a dog competition hobby (AKC obedience and tricks) and I began volunteer-teaching classes at my local AKC obedience club.
Neighbors started asking me for help with their dogs and in 2020, I started taking money for it. Some months, my dog training side hustle made even more than my full time job! Which was much-needed, because during the pandemic my husband’s business struggled and he had to take a hefty pay cut.
Our original plan was to wait to take the dog training business full-time until we had a property better suited to it. Right now we live in a condo with no yard, and I have 2-3 client dogs living with us at any given time… so I walk A LOT.
What feels most pressing right now? What brings you to submit a Case Study?
Well, when I first applied to do a Case Study, my most pressing concern was when to quit my “real job” and train dogs full time. However, some circumstances with my “real job” gave me the kick in the pants I needed to quit and turn my side hustle into a full-time endeavor.
Luckily, we have ample savings and investments, and the training business is booming as many people working from home during Covid bought puppies. I’m consistently booked about 2 months in advance. So that’s job security for me! But also a lot of screamy barky dogs, which is bad for us and our neighbors on 3 sides.
Now, I want to get our finances in order to build a house that will allow both of our businesses to grow in the future. Right now the dogs are in our living room so if we have a howler, barker or a whiner, it is really difficult, and of course, walking up and down 4 flights of stairs 12 or more times a day (we live on the 3rd and 4th level of a townhouse duplex condo thing) is not efficient.
It’s good for my legs but I spend more time walking than I do training sometimes! I could do other types of training (lessons, day training in clients’ houses/yards, group classes) but I actually do enjoy the board-and-train style in my home.
Birdie and Allan’s House Hunt
We tried looking for houses this spring, but in the Montgomery County, MD area where my client base is, real estate is expensive, especially now. We couldn’t find anything in our budget ($650k or under) with a yard, an office for my husband, and training space for me that would be separate from the main living area. Well, we did find some but my husband doesn’t want to live in an older home and deal with repairs. So now we are interviewing architects to potentially build a custom home on a lot or teardown. As it turns out, a teardown is likely to be less expensive–in our county, you have to pay at least $40,000 to build on an empty lot.
The other challenge is that my husband’s business is not in a good place. It was very dependent on putting on industry conferences, which obviously couldn’t happen last year due to the pandemic, and they had to pivot to selling online events. Since it’s just him, his mom and his dad, they are able to be nimble and innovative, but my husband has more macro concerns for the future of the business.
As his industry consolidates with large companies buying up a lot of the smaller companies he used to sell to, he worries his company is becoming expendable. (ie. the larger companies will not really have an adverse effect if they don’t buy his company’s research, but when there were a lot of smaller companies they were a bigger fish).
This year his parents are officially giving the business to him and retiring. He will have to continue to pay them a salary for a few years, with certain stipulations and caps in place. The challenge of course is his ability to pay himself, his parents and grow the business. He would like to hire an employee, which could be either an online or in-person position.
He just got his MBA, but for his entire adult life, he has worked for the family business. The good news is that he has an amazing network and great relationships with leaders in his industry nationwide. I have no doubt he could easily find another job, but he’s never worked in a traditional office and I don’t think he would enjoy it. He also toys with the idea of going into law.
What’s the best part of your current lifestyle/routine?
Getting to do what I love, feeling like I have control over my day-to-day life and future, and not being subject to an employer’s needs. Not gonna lie, the entrepreneur life agrees with me!
As I wrote this, my husband came downstairs and said, completely unprompted, “Your business is the best thing that has ever happened to us.” We’re currently boarding an adult Dalmatian who keeps peeing in his kennel and Allan likes the fact that he can come downstairs anytime and discuss training ideas with me. Needless to say, I am SO lucky and grateful to have the husband that I do. I have no idea why he supports my weird and unreasonable life choices!
What’s the worst part of your current lifestyle/routine?
Screamy, whiny, poopy dogs in my living room. Not all of them are like that, but some are and it would be nice to have them in a separate area that I can’t hear while sleeping. I don’t want to rent kennel space though. I like the boutique, luxury “part of the family” training (and pricing) that I can offer with my board-and-train approach.
Being a luxury service provider, I know that downturns in the economy could be a threat to my income. But if dog training can thrive through Covid, and I continue to have a strong savings cushion, I am not overly worried.
Of greater concern to me is the uncertainty surrounding the future of my husband’s business. But then again, the future is always uncertain!
Where Birdie and Allan Want to be in 10 Years:
- We would like to be able to retire early and work by choice. However, we don’t have a particular age in mind for this.
- We are definitely not strict budgeters–we do best with our system of:
- 1 month of cash reserves in checking
- 6 months of cash reserves in savings
- Everything else invested.
- I have a great relationship with my former employer and they still manage our investments without charging us anything, using a low cost, index-based approach.
I would like to be pretty much doing what I am now! Just in a space that allows for more work/life separation, and would allow clients to come to me rather than me go to them for private lessons.
- I would like to be able to get back into horseback riding again at some point. That was a big part of my life for 15 years, but it is not a priority right now as I am growing the business.
- In the nearer term, I’d like to get into some type of protection sports with a Malinois or a German Shepherd.
- Allan and I aren’t going to have children–we love the DINK life!
- I would eventually like to have employees and be more of a business owner than a day-to-day dog trainer.
- I actually enjoy the marketing and strategy aspect of the business.
- I’d like to be able to focus my training more on competing my own dogs and particular clients I want to work with.
Birdie and Allan’s Finances
|Allan’s net monthly salary||$5,704||Allan is set to take over the company from his parents this fall so his salary will increase significantly.|
|Birdie’s monthly business distribution||$3,000||This YTD my dog training business made an average of $9,000 per month after taxes and expenses, but I don’t take that much as salary. I’m in the process of switching to the “Profit First” business envelope budgeting system.|
|Item||Outstanding loan balance||Interest Rate||Loan Period and Terms||Equity||Purchase price and year|
|Mortgage on condo||$253,403||3.63%||30 year fixed rate||$110k||$360k; purchased in 2011|
|Item||Amount||Notes||Interest/type of securities held||Name of bank/brokerage|
|Allan’s workplace retirement plan||$150,000||Allan’s dad used to manage this and had a bunch of individual stock positions which scared the pants off both of us; thankfully that is changing with the transfer of ownership of the business|
|Fidelity joint taxable brokerage account||$86,614||Passive index funds on the equity side, actively managed mutual funds on the bond side. 80% equities; 20% fixed income||Fidelity|
|401k from past job||$71,220||Same as above||Fidelity|
|Personal Savings Account||$25,806||Emergency fund||Capital One|
|Fidelity Roth IRA||$19,998||Same as above||Fidelity|
|Axos Business Checking||$19,218||Axos Bank|
|Personal Checking Account||$11,979||Income goes into this account and we pay the credit cards from this account||Capital One|
|Cash balance plan||$10,295||Same as above||Schwab|
|Fun money||$66||Allan and I both get $375/mo “fun money” to do whatever we want with. I usually spend mine.||Capital One|
|Vehicle make, model, year||Valued at||Mileage||Paid off?|
|Subaru Impreza 2018||$17,800||40,000||Yes|
|Subaru BRZ 2013||$15,000||50,000||Yes|
|Groceries||$600||We aim for $150/week, sometimes it’s less|
|Birdie’s health insurance||$313||Paid via the business pre-tax. Allan’s insurance is paid for by his business.|
|Vacation||$271||In non-pandemic years we usually go on one or two family vacations (inexpensive) and one big vacation like Mexico or London|
|HappyNest||$200||Laundry wash-n-fold service. This REALLY helps our marriage because I hate folding clothes so I procrastinate and then get frustrated that my husband doesn’t do it unless I ask him|
|Lifetime Fitness||$199||Going to the gym is one of our favorite ways to spend time together|
|Subscriptions||$175||All recurring subscriptions are paid on our Fidelity Cashback card: Netflix, Hulu, HBO, Pet’s Best dog insurance. Paid off in full monthly|
|Gas||$175||Allan drives very little and Birdie drives A TON. I’m starting to pay for gas through the business pretax because almost all of the driving is for dog stuff.|
|Cleaning person 1x/mo||$120||TBH I think we should ask the cleaning person to come more often…|
|Personal care||$114||Haircuts, Walgreens|
|Cell phone – AT&T||$110||I know you’ll recommend the cheaper cell plan…but the business pays for it pre-tax, and I absolutely need reliable service for safety since I am often walking dogs and teaching lessons alone. Allan’s cell phone is paid for by his business|
|Gifts (Christmas, birthdays, etc.)||$100|
|Imperfect Foods box||$100||Produce and baked goods|
|Car insurance||$94||paid annually|
|Dental insurance – Birdie||$34|
|Clothing||$33||Allan buys clothes rarely and I usually buy clothes once per year, used from ThredUp|
|Dog insurance||$33||This is through Pet’s Best. We use it as a “catastrophic” plan. It has a $1000 deductible so for well visits and minor health issues less than $1000, we pay out of pocket.|
|Books||$20||Usually get 1-2 Kindle books/month|
Credit Card Strategy
|Card Name||Rewards Type?||Bank/card company|
|Fidelity Cashback||Cashback to investment accounts||Fidelity|
|Capital One Quicksilver||Cashback||Capital One|
|American Express Business Cash||Cashback||American Express|
Note: these credit card links are affiliate links.
Birdie’s Questions for You:
- What financial pitfalls do I need to watch out for as a small business owner? Any to-do’s and to-don’ts?
- Should we build/buy a bigger, more expensive house (with two “wings” for each of our businesses to grow) or just focus on a house that has space for the dog business, and expand Allan’s office space later if needed?
- I’m not sure whether to invest on a monthly or quarterly basis using dollar-cost-averaging, or to invest at year-end with a lump sum. My investor self balks at the idea of not saving monthly… but my business owner self wants to keep cash reserves just in case of a large tax bill. What should I do?
- If anyone has experience working with an architect or building a house that has a WFH/home business element, I am open to advice and lessons learned!
Liz Frugalwoods’ Recommendations
I am so impressed by Birdie’s determination and success in navigating a non-traditional career path! She had a passion for dog training, she began training as a side hustle and eventually built her business into a full-time, well paying, exciting job. Nicely done!
I also want to commend Birdie and Allan for their prudent financial decisions over the years: their ability to stay out of debt, to buy a home and to invest!
I think Birdie is an exemplary example of how to transition from a traditional job to self-employment: start doing it because you love it, start charging some money for it, start charging more money, expand your services, see what the market will bear and then–once you’re making actual money–quit the “real” job. Alrighty, let’s dig into Birdie’s questions.
Birdie’s Question #1: What financial pitfalls do I need to watch out for as a small business owner?
My answer to this one is brief: hire a CPA who specializes in small businesses. It’s a lot easier (and better) to set things up right the first time than to try and fix unintentional mistakes later on. Since Birdie’s business has grown from a hobby to a lucrative endeavor, it’d be a good idea to confer with a CPA to ensure things like registrations, licenses, insurance and business insurance, liability, etc all match the current level of the business since it appears to have grown quite quickly.
I think it would be money well spent to hire a CPA to advise her on all of the above and on how to structure the business, particularly if she wants to bring on employees.
A CPA should also be able to advise her on how to structure the purchase of a property that’ll be both a home and a business.
Birdie’s Question #2: Should we build/buy a bigger, more expensive house (with two “wings” for each of our businesses to grow) or just focus on a house that has space for the dog business, and expand Allan’s office space later if needed?
A major question I have here is whether or not Birdie needs to be located right where her customers are? Now that she’s built a base of customers (and has a waiting list!), I wonder if she could move farther away from town? It sounds like the ideal set-up for Birdie and Allan would be a rural, or semi-rural, property with lots of space, outbuildings, and the potential to build more outbuildings if needed.
The constraints of a high cost-of-living area will always butt against Birdie’s need for more space. Plus, it seems like an expensive and frustrating endeavor to try and shoehorn themselves into a more urban location. Gaithersburg is essentially a suburb of Washington, DC and so it’s unlikely housing prices will ever decrease in a meaningful way. It seems like she’s already done the hard work of establishing her business and so, at this stage, it might not be an impediment to live farther out. It sounds like they need some land!
Reasons Why Rural Might Work (in my uninformed opinion):
- Since she’s built a base of customers, I imagine she’s getting great word-of-mouth recommendations.
- Birdie also mentioned that she enjoys the marketing aspect of her business and most marketing happens online anyway, making her location less important. It’s not like she’s reliant upon foot traffic to drum up business.
- Since she offers the boutique board-and-train model, I assume dogs are staying with her for a number of days, making the need for transport less of an issue.
- I also wonder about playing up the boutique angle of training dogs on a bucolic farm–the marketing copy writes itself!
- Could Birdie offer a doggie shuttle service to and from the DC area to make it more convenient for her clients? Again, since I assume the dogs are with her for a week or so, this wouldn’t need to be a daily drive.
It may be that Birdie and Allan don’t want to leave Gaithersburg, but I’m hard-pressed to see how the money will work out for the amount of space it seems they need. Going rural could solve a number of these challenges and present them with a lot more land to work with. In terms of building, in my woefully limited experience, it is always more expensive to build new than it is to buy an existing house–particularly if you’re going rural.
Additionally, under her longterm goals, Birdie mentioned that she’d like to get back into horseback riding and also pursue protection sports with a Malinois or a German Shepherd. Both of those activities could, again, be easily enacted on rural land. Just saying…
Another question I have on this topic is how much the condo is actually worth? I am guessing they have more equity in there than reported.
Birdie didn’t ask about this, but I sensed a good deal of uncertainty and strain surrounding Allan’s job. I’m going to quote Birdie to Birdie here:
[Allan remarked,] “Your business is the best thing that has ever happened to us.”…Allan likes the fact that he can come downstairs anytime and discuss training ideas with me.
…my husband has more macro concerns for the future of the business. As his industry consolidates with large companies buying up a lot of the smaller companies he used to sell to, he worries his company is becoming expendable.
He just got his MBA… I have no doubt he could easily find another job, but he’s never worked in a traditional office and I don’t think he would enjoy it. He also toys with the idea of going into law.
While I gather Allan needs to remain with the family business for at least the next several years in order to fulfill his obligations to his parents, I wonder if he’s considered winding the business down or selling it? From my outsider’s perspective, I don’t hear that Allan has any real passion for this work and it also seems like a somewhat sticky situation to be beholden to his parent’s vision of the business for the rest of his life. While it’s clear Allan has learned a lot and thrived in this role, I wonder if it’s his true passion?
My pressing question: why not do the dog business together full-time?
With an MBA and years of experience working in a small family business, it seems Allan would be a tremendous asset to Birdie’s business. Plus, with his help, they might be able to move through the waitlist of clients more quickly and generate more revenue. Birdie and Allan might not want to pursue this, and I get that it wouldn’t happen tomorrow, but I wonder very seriously about working towards this goal in the next five or ten years.
Birdie’s Question #3: I’m not sure whether to invest on a monthly or quarterly basis using dollar-cost-averaging, or to invest at year-end with a lump sum. My investor self balks at the idea of not saving monthly… but my business owner self wants to keep cash reserves just in case of a large tax bill. What should I do?
Birdie’s right: on one hand, it makes the most sense to smooth out your investments over the course of a year by investing monthly. It ensures you’re always adding to your portfolio and it buffers you against accidentally buying a ton of stock at the height of the market.
But on the other hand, Birdie’s correct that owning your own business has the potential for unexpected large expenses and it’s always easier to have cash on hand than to need to liquidate investments and pay capital gains taxes.
Since Birdie and Allan plan to buy a new home/property in the near term, I’d say keep the money liquid for now. When things are up in the air like this, it’s often best to just sit on your cash. Once they’re settled in their new place, then they can think about investing more aggressively.
Birdie is super financially literate, so I don’t have a ton to say–just a few things for her to consider:
- Solo 401k. Now that Birdie’s business is a legit, lucrative thing, she needs to set up a self-employed retirement account. There are a number of different options for self-employed folks and I encourage her to speak with her financial advisor and also her soon-to-be-hired small business CPA.
- Combine and consolidate banks. This is more of a personal preference, but I’m wondering why they have money spread across four different institutions? I find it a lot easier and more straightforward to consolidate everything under the same institution.
- Consider rolling over the old 401k. The main reason to do this is so that you have control over what it’s invested in. Since Birdie is a savvy investor, I think she should consider doing this.
Well Done on the Credit Cards!
I also want to mention how wise Birdie and Allan’s credit card strategy is. Utilizing cash back cards and a business cash back card is a brilliant–and easy–way to earn money when you spend money (affiliate links).
For more on how to create a sound credit card strategy, check out this post.
- Hire a small business CPA (if she hasn’t already) to ensure the business is set up correctly and beneficially.
- Hang onto the extra liquid cash until the house buying process is complete.
- Open a solo 401k, consider consolidating to one financial institution, consider rolling over the old 401k.
- Start exploring the idea of a more rural home: what areas might work? Is it feasible to be geographically distant from her clients? Would a doggie shuttle service be viable? Start looking at what’s on the market and consider how that might work.
- Would Allan ever consider winding down his family’s business and joining Birdie full-time? Discuss.
- Enjoy the awesome life they’ve created together!
Ok Frugalwoods nation, what advice would you give to Birdie? We’ll both reply to comments, so please feel free to ask any clarifying questions!
Would you like your own case study to appear here on Frugalwoods? Email me (email@example.com) your brief story and we’ll talk.